The Apple stock price slumped 2% following the company's biggest product unveiling of the year today (Wednesday). But in the long run, today's announcements will propel AAPL stock to new heights.
Apple Inc. (Nasdaq: AAPL) revealed the new iPhone 6S and iPhone 6S Plus, as well as a larger iPad aimed at the business market and a revamped Apple TV.
Wall Street at first seemed impressed by Apple's news. AAPL stock rose as much as 1.5% in the minutes after CEO Tim Cook started speaking.
But after that, Apple stock tumbled. By the time the market closed, AAPL had surrendered 1.92%, or $2.16. Apple stock ended the session at $110.15.
For the most part, the pre-Apple Event rumors were spot on. However, Cook did provide a mild surprise by unveiling a few new models of the Apple Watch, along with some new watchbands. It never hurts to refresh a product line heading into the holiday shopping season.
Apple's marquee product, the iPhone, physically looks almost identical to last year's models. The screen sizes of 4.7-inch and 5.5-inch - last year's game changer - are exactly the same. But Apple made significant upgrades under the hood.
This Year's iPhone Beautiful on the Inside
The A9 chip that runs the iPhone 6S models is (according to Apple) 70% faster than the A8 chip it replaces. Its graphics module is 90% faster. Apple also upgraded the rear camera to 12 megapixels from 8, and the front camera from an inadequate 1.2 megapixels to 5.
The headline feature this year is something Apple calls "3D Touch." It means the glass screen can react to the pressure the users applies. The 3D Touch feature opens up a range of new ways to interact with the iPhone system as well as the apps running on it.
The big concern is whether this year's upgrades will be enough to keep iPhone sales humming as they have been for most of the past 12 months. Because the iPhone accounts for about two-thirds of Apple's revenue, that's a key question.
While not as dramatic an upgrade, the iPhone 6S models will sell well enough to keep the Apple profit machine well-fed.
One reason is because as of the most recent quarter, only 27% of its customers had upgraded to the iPhone 6. So there's plenty of opportunity there. Don't forget, many U.S. customers on two-year plans are still using an iPhone 5S or iPhone 5C with the puny 4-inch screen. They'll be eager to upgrade.
But two other reasons the iPhone 6S will sell better than expected turned up at today's Apple Event, and probably slipped past Wall Street...
The iPhone 6S Will Do Its Part to Drive the Apple Stock Price
One clever move Apple made had to do with encouraging more Android "switchers." Apple already has said that it has seen a rising number of Android refugees.
Today, AAPL made the chore of switching to the iPhone much easier. Apple released an Android app that assists in the transfer of all of a user's data from an Android smartphone to a brand new iPhone. Devious, but smart.
For those worried that Apple may be reaching iPhone market saturation levels, the company came up with an iPhone Upgrade Program. Once you buy an unlocked iPhone, you need only keep paying a monthly charge (starting at $32) to be eligible for Apple's latest and greatest every year.
Customers need only trade in the old iPhone for the new one. That should help speed up the upgrade cycle, and create a new supply of less expensive iPhones for those on a budget.
Both of these moves will drive sales of the iPhone 6S models - and the AAPL stock price.
And Apple's other announcements will also prove to be positives for Apple stock.
How the iPad Pro and Apple TV Will Help the AAPL Stock Price
For nearly two years, Apple earnings have had one consistent negative: the iPad. Year-over-year sales of the tablet have declined for six straight quarters. Cook has blamed the iPad slump on cannibalization from both the Mac and the larger iPhones.
But with the iPad Pro Apple unveiled today, that will change. With a 12.9-inch screen and a processor chip that Apple says is more powerful than those found in most laptops, the iPad Pro is aimed squarely at the $2 trillion enterprise market.
The iPad Pro announcement dovetails with Apple's recent partnerships with two tech veterans with a lot of experience selling to enterprise customers: International Business Machines Corp. (NYSE: IBM) and Cisco Systems Inc. (Nasdaq: CSCO).
And the addition of a stylus - the Apple Pencil - as well as a magnetically attachable keyboard (think Microsoft Surface Pro) make the iPad Pro a productivity powerhouse that will appeal to a lot of business customers.
Finally, there's the revamped Apple TV.
The box doesn't look much different, but Apple has added a new, living-room-based platform to its powerful ecosystem. It even has its own operating system, tvOS, based on the iOS that runs the iPhone.
Not only does the Apple TV link to the company's content partners like Netflix Inc. (Nasdaq: NFLX) and Apple's own media offerings, it now will have its own apps. And that means downloadable games.
And if that's not enough to tempt consumers, the remote just might be. It combines a touch surface for navigation along with Siri-based voice control. It makes searching for content much simpler. And the motion sensors in the remote make it perfect for gaming.
The new Apple TV is reasonably priced, too. A 32-gigabyte version is $149, with a 64-gigabyte version coming in at $199.
The new vision is for the Apple TV to serve as both portal and marketplace for all manner of digital entertainment. This should become a very lucrative business for Apple over the next couple of years, and one more catalyst for the AAPL stock price.
Follow me on Twitter @DavidGZeiler.
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About the Author
David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.